Trouble in bank-owned buildings a persistent and sometimes expensive problem for the city

Late on Sept. 1, dozens of Anchorage firefighters raced to a blaze in a four-plex on the 600 block of North Bunn Street in northeast Anchorage.

The building was abandoned, sold to Wells Fargo bank in a 2016 foreclosure sale, and the fire destroyed the first floor. It had been officially unoccupied, awaiting a buyer, and was supposed to be secured, according to city law.

But the doors and windows were kicked in and there were signs of people sleeping there. City code enforcement officers repeatedly warned Wells Fargo in the weeks before the fire to board it up and get those people out.

Investigators later determined one of the illegal occupants had accidentally started the fire. Fighting the blaze cost taxpayers: 11 Anchorage Fire Department units that responded, totaling 34 firefighters and crew members. The fire also caused an estimated $120,000 in damage.

As city officials intensify efforts to deal with blighted and abandoned buildings, the North Bunn Street fire highlighted a persistent gap: City officials have limited options when it comes to foreclosed properties with unclear ownership and management by often-distant banks.

In a statement, Wells Fargo defended its efforts to secure its buildings, including the one on North Bunn Street.

"Wells Fargo takes seriously its obligation, consistent with applicable law, to maintain properties for which it has a responsibility," said the statement, provided by Alfredo Padilla, a Wells Fargo communications specialist in Los Angeles. "Wells Fargo has a property preservation team that conducts monthly inspections to ensure properties are being kept in accordance with local standards."

City weighs legal changes

Troubled bank-owned structures rise to the city's attention when people break in and occupy them, sparking neighborhood complaints and racking up a large taxpayer bill in police, fire and code enforcement responses. Police and officials described the break-ins as a byproduct of a drug epidemic, and to a lesser degree, a sign of Anchorage's difficulties dealing with homelessness.

Jack Frost, the city's code enforcement chief, said it didn't seem that break-ins were happening more often than in the past, but now more people seemed to be occupying the homes. Frost said the occupants of the abandoned buildings often have arrest warrants.

Nancy Burke, the city homeless coordinator, said city officials and police don't believe most people who break into abandoned buildings are truly homeless. More often than not, the buildings were the sites of drug deals before they were abandoned, and it appears drug users simply continue to use them, she said. At the same time, she said, the city doesn't yet have much data to back up the assumptions.

She said the city's increased focus on securing abandoned buildings could possibly lead to more people camping outdoors.

From a legal standpoint, Rebecca Windt-Pearson, the city attorney, described the issue of break-ins at foreclosed properties as a widespread, unyielding problem.

"We do see it persistently happening across neighborhoods," Windt-Pearson said.

That's in part because the foreclosure process takes time, she said. There's often a lull when the property enters foreclosure but the ownership is unchanged. At that point, the owner is generally not involved, she said. Meanwhile, banks tend to be located out of state.

Right now, Windt-Pearson said, the city lacks an easy way to hold banks accountable for securing foreclosed properties. The city has a vacant building registry, but that applies only to building owners, she said.

She said her office is drafting a law that would replicate efforts in Los Angeles and other cities to start what's known as a "foreclosure registry," where mortgage lenders who are starting a foreclosure process have to provide local contacts.

While not necessarily a fix-all, such a registry would go "a long way," Windt-Pearson said.

A persistent problem

In late July, Clark Rosencrans, a city code enforcement officer, was surveying a property in Mountain View when a neighbor approached him. The four-plex on North Bunn Street was supposed to be unoccupied, but people had been coming and going from it, the neighbor said.

Rosencrans went to check it out. The windows and front door were open. Records showed Wells Fargo owned the building. Rosencrans contacted the bank.

"I said, 'The front door is kicked in, you need to take care of this,'" Rosencrans said. "And they're like, well, there's people inside, we have to go through an eviction process."

On July. 26, according to an emailed timeline, Rosencrans posted notices on the door saying the building was dangerous. He said he also emailed the code violation department at Wells Fargo.

Ten days later, a Wells Fargo representative contacted Rosencrans about the violation, according to records from Rosencrans. The representative, Gary Kobal, said he would have a local contractor secure the property the next day as long as people were cleared from the structure.

Rosencrans declared the building unfit for human occupancy the next day. Members of the Anchorage Police Department Community Action Policing Team swept in. Six people were expelled from the building.

The contractor was directed to close the windows and replace damaged door locks, Rosencrans said.

The next day, the neighbor called Rosencrans. There was bad news. Just hours after the police left, the doors were kicked in and people were coming and going again.

Rosencrans said he emailed Wells Fargo asking for the property to be boarded back up. He suggested thick plywood and a certain pattern of screws. Banks have preset standards for how a building should be secured, but in Anchorage, those tend to be inadequate, Rosencrans said.

"These people here are really motivated to get into places," Rosencrans said. "It's cold outside, they know it's empty, they need a place to stay, and tearing off a half-inch of plywood is no big deal."

On Aug. 23, the police came back. This time, officers removed 12 people from the four-plex.

Rosencrans said he was told twice by Wells Fargo that the building would be re-secured, but that didn't happen. Windows and doors were repeatedly being broken, Rosencrans said. By Aug. 30, Rosencrans was fining Wells Fargo $500 a day for violating the city's nuisance building laws.

Wells Fargo, contacted with the specifics of Rosencrans' account, would only say it was responding to the concerns.

"We're aware of ongoing issues related to this property and will be working closely with our vendors, city code officials and local law enforcement to resolve them as quickly as possible," according to the Wells Fargo statement, provided by Padilla.

Fire shows people living there

The first 911 calls reporting the North Bunn Street fire came in at 10:20 p.m. on Sept. 1. When crews entered the building, they found makeshift furniture and other signs that people were sleeping there.

A fire investigator later determined that the blaze wasn't started intentionally, but "contents brought into the unit" by people who were living there contributed to the spread and extent of the damage, according to Alex Boyd, the assistant fire chief.

There was no running water. Buckets were being used to collect human waste. There were signs of drug paraphernalia, like orange-capped needle syringes.

Wells Fargo doesn't directly manage foreclosed properties. It hires a national company, Safeguard Properties, which then hires a local contractor to do the work.

Around noon on Sept. 4, the contractor arrived to board the four-plex back up.

About 2 p.m., officers with APD's Community Action Policing team showed up. Officers drew their guns and shouted into the building: "Sound off, Anchorage police."

The police searched the basement first, then the second floor. No one was inside. In the basement, there was a refrigerator, a wheelchair, a leather couch, a mattress and a floor lamp. There was spray paint on the walls.

In the wall, cellphone chargers were left plugged in.

There was no water, but the building still had electricity — making the building more attractive to squatters, Rosencrans said.

Loren Holmes contributed reporting.